Policy update

U.S. EPA/DOT Supplemental Notice of Intent Regarding Light-Duty Vehicle Standards for 2017–2025

On July 29 the U.S. Environmental Protection Agency (EPA) and U.S. Department of Transportation (DOT) issued a Supplemental Notice of Intent (SNOI) on 2017–2025 Model Year Light-Duty Vehicle greenhouse gas (GHG) Emissions and corporate average fuel economy (CAFE) Standards. EPA and DOT estimate that the standards discussed in the SNOI would reduce greenhouse gases by approximately 2 billion metric tons and save approximately 4 billion barrels of oil over the lifetime of the model year 2017–2025 vehicles.

Key Elements of the Proposed Program

The average light-duty vehicle GHG emission rate would be reduced from the 2016 level of 250 g CO2e/mile to 163 g CO2e/mile for model year 2025, a 35% reduction. Passenger vehicle fuel economy is estimated to increase from an average model year 2016 level of 34.1 miles per gallon to 49.6 miles per gallon in 2025, an increase of 45%. Annually, this would be a 4.6% reduction per model year in the average GHG emissions, and 4.25% increase per model year in miles-per-gallon fuel economy.

Credit Provisions

Emission reduction compliance credits include air-conditioning system technology, flexible fuel vehicle deployment, off-cycle technologies, incentives for electric vehicles, and “game-changing” technologies installed on pickup trucks. Of these credits, only the air-conditioning credits and some off cycle technology credits reflect real-world emission reductions that are not included on the compliance test cycles. The others would reduce the overall stringency of the standards, without corresponding reductions in real-world emissions.

Regulatory design

The proposals use a vehicle size-based standard for two vehicle categories, following the current 2012–2016 standard framework. Separate numerical standards for vehicle size or “footprint” are proposed for passenger cars and for light trucks. Because there are two categories, car and truck, and the standards are based on the footprint attributes of future year vehicle sales, the exact GHG and fuel economy outcome from the program is somewhat unknown and subject to the sales mix of vehicles sold in the future. Each auto manufacturer will ultimately have a different footprint-based standard based on its sales mix of vehicles at each vehicle size and its car and light truck sales mix.

The proposed 2022–2025 standards would set consistent improvements for all cars and light trucks, with annual CAFE increases of 4.7% per year and annual CO2 reductions of 5.0% per year. Both EPA and NHTSA intend to propose a lower annual rate of improvement for light-trucks in the early years of the program. EPA is proposing an annual CO2 reduction for cars of 5%, but only 3.5% for light trucks. Similarly, NHTSA is proposing an annual fuel economy increase of 4.3% for cars, but only 2.9% for light trucks. The required reductions for light trucks are also tilted, such that the smallest light trucks have larger increases (but still less than cars), while the larger light trucks have smaller increases. The annual fuel economy increase from 2016 to 2025 for cars is almost flat and ranges from 4.4% to 4.5%. The annual fuel economy increase for light trucks starts at 4.3% for the smallest trucks, drops to 3.4% for larger SUVs, and falls off to only 2.2% for the largest pickup trucks. Note that the 2012–2016 standards also imposed smaller increases on the larger vehicles than they did on smaller vehicles.

International context

The U.S. agreement for 250 g CO2/mile is equivalent to about 172 g CO2e/km when miles are converted to kilometers and adjusted to the European driving cycle. The 2025 standard of 163 g CO2e/mile is similarly equivalent to 107 g CO2e/km. Note that the US light-duty standard is composed of passenger cars as well as light-duty trucks. When passenger cars alone are taken in to account, the 2025 standard is equivalent to 91 g CO2e/km when adjusted for European driving cycle.